Android in China: An Undiscovered App Market?

This is a computer translation of the original content. It is provided for general information only and should not be relied upon as complete or accurate.

A new report from Chinese search engine company Baidu this week revealed mobile trends with Android users in China. A few of the most intriguing stats:

There are now over 270 million active daily Android users in China

This reflects a 13% overall growth in Q3 2013, as compared to a 55% growth rate in the same quarter a year ago

Most Android device sales (52%) come from users upgrading to new Android phones; 48% are users purchasing a smartphone for the very first time

A large part of Android growth (45%) is focused in rural areas and small cities

Android owners spend upwards of 150 minutes a day on their smartphones (this is an increase of 26 minutes from the previous year), checking their devices an average of 53 times a day)

44% of Android users in China use Wi-Fi for their access to the Internet, especially for video. 31% get their information from 2G networks, and 23% use 3G.

App downloads for Chinese Android device owners are growing exponentially: the average user downloaded 10.5 apps per month in Q3 2013; the previous year, it was 8.2 apps monthly

15% of Android users in China install at least one new app a day vs. 11% in Q3 2012

59% use app stores to download their apps, while 13% use online app searches and 21% use their PCs to sideload apps onto their Android devices

It’s worth pointing out that Chinese smartphone data is infamously difficult to obtain, mostly because a centralized app store (such as Google Play) does not work in the Chinese market and most Android devices don’t use Google services, therefore there is very little data for Google to work with. According to Chinese Android app store Wandoujia, more than 70 percent of Android smartphones in China do not offer Google Play services, which makes this data from Baidu quite valuable. China and SE Asia are considered by most data measurement services to be the world’s largest smartphone markets; with over one billion Android devices being activated worldwide, the numbers coming out of both China and SE Asia are mind-boggling when compared to global usage:

From January to September 2013, consumers from Singapore, Malaysia, Thailand, Indonesia, Vietnam, Cambodia and the Philippines spent $10.8 billion on nearly 41.5 million smartphones, according to a new report from market research agency GfK Asia. Last year, they spent $7.54 billion on 25.8 million smartphones. – “Smartphone sales surge in SE Asia”, NextWeb.com

However, since the road to app publishing and app stores is quite different than what most developers are used to, it might be prudent to target third-party app distributors (such as the afore-mentioned Wandoujia).

Lost revenue?

The lack of a centralized app store in China is potentially damaging to developer revenues simply because of lack of access:

"Reports estimate that China’s game industry brought in $9.7 billion in revenue last year across all segments, and the figure could grow to $21.7 billion by 2017. However, a latest report released by Chinese Android app store Wandoujia – which monitors trends in China’s mobile market based on its downloads — notes that foreign games, even if they are popular in China, are losing out on potential revenue by linking up with Google’s billing system. Wandoujia estimates that more than 70 percent of Android smartphones in China lack Google Play services. This has led to Chinese users being unable to make in-app purchases when playing foreign games such as Clash of Clans, which use Google’s in-app billing system." - “Foreign games in China lose potential revenue by using Google in app billing”, The Next Web

The sheer numbers of smartphone users – especially Android users – in China are enticing for developers looking to expand into new markets. But it’s not just a matter of “getting in there”; there are many more factors that influence a successful app in the Chinese market as a recent article from Venture Beat points out:

China’s feature phone market has dropped dramatically in the past 18 months, and 90%+ of those consumers are upgrading to entry-level Android smartphones. Since the capabilities of most Chinese smartphones still trail behind their EU/US counterparts, developers should expect to re-optimize their apps to run well on them.

China has several hundred Android app stores, many devoted to specific kinds of apps or users, while others hawk knock-off or hacked apps. However, just around 20 of all these app stores count as major players in the overall ecosystem.

Many Western developers opt to work with a third-party company with a local presence in China and focus their distribution efforts only on China’s very largest app stores.

For foreign developers operating without a local partner, it can be quite frustrating to contend with monetization, let alone the Chinese government’s 30% tax hit.

In addition, while developers are used to certain app publishing/development guidelines, in China, things are very different. For example, each app must not only be localized for language, but also customized for Chinese social media products and cloud services. Between Chinese publishers and the government, developers should expect a hit of at least 30% off the top of their revenues. There are many, many rules and regulations you’ll have to follow, and each app store has their own specific guidelines. And how about getting paid? ReadWrite.com has this to say on the subject:

“In many ways, China is still a cash-based society. This makes it difficult for developers to make money through app store purchases. In a similar way, Google Play is not easily accessible in China, which hampers Android app monetization. This means you’ll need to integrate the local online payment options that are popular, such as Alipay. You’ll also want to work directly with China’s three mobile carriers—China Telecom, China Unicom and China Mobile—because allow in-app payments directly billed on the consumer’s carrier payment plan. About 75% of app payment in China comes through direct carrier billing. International digital payments processor Fortumo has a relationship with all three carriers, which creates a doorway for Western developers.” – “7 things developers don’t know about the China mobile market but should”, ReadWrite.com

Before you decide that it sounds like too much trouble to get an app into the Chinese market, consider these recent stats from App Annie:

According to Niko Partners’ 2013 Chinese Mobile Games Market Report, in 2012 there were 192 million mobile gamers in China. This year there will be 288 million. In 2014 there will be 390 million.

Mobile gaming is the fastest growing segment of the entire Chinese games market.

Even in smaller cities where not everyone owns a phone, the ratio of phones to people is more than 125%.

Mobile app users are spending 40% more time on their devices playing games in 2013 than they did in 2012, and they visit their favorite games 41% more often than in 2012

The official App Store is the only legitimate point of entry for iOS games, but for Android there are so many options that it is difficult to know where to turn.

Have you made the move to the Chinese app market? What was your experience? Please share your knowledge here in the comments.